Shares of Nvidia took a huge spike on Monday, highlighting the biggest single-day market loss in history. The stock plunged 17%, wiping out nearly $600 billion in market value.
The massive decline stemmed from fears about U.S. dominance in artificial intelligence as the Chinese company DeepSeek showcased a breakthrough large-language model (LLM) developed at a fraction of the cost seen in America.
The company’s valuation fell from $3.5 trillion to $2.9 trillion, falling behind Apple and Microsoft.
DeepSeek Challenges Nvidia’s AI Leadership
The release of DeepSeek’s advanced AI model is the primary reason for Nvidia’s stock decline. DeepSeek, a Chinese AI company, claims to have developed its LLM at a fraction of the cost spent by its American counterparts.
Although Nvidia GPUs were used in the process, the company reportedly spent just $5.6 million on the technology.
Even if this figure is underestimated, it disrupts the perception of Nvidia’s role as the cornerstone of high-cost AI innovation. Nvidia’s GPUs, which can cost up to $25,000 each, are a major source of the company’s revenue.
Its net profits skyrocketed from $4.8 billion in 2022 to an estimated $66.7 billion in 2024, driven by demand from major U.S. firms like Meta, Tesla, and OpenAI.
DeepSeek’s achievement, however, demonstrates the potential to create cutting-edge AI with significantly lower costs.
This raises concerns about whether American tech companies will begin shifting toward cost-efficient alternatives, ultimately hurting Nvidia’s dominance in the field.
Wall Street Reacts
Monday’s events marked Nvidia’s worst percentage drop since March 2020, during the onset of the COVID-19 pandemic. The 17% dip not only shook investor confidence but also led to broader losses across the tech sector.
- The S&P 500 fell by 1.5%.
- The Nasdaq, heavily concentrated with tech stocks, declined by 3.1%.
- Other AI-related companies, including chipmakers Arm and Broadcom and data giant Oracle, all saw drops of at least 10%.
Despite this, Nvidia’s spokesperson issued a statement describing DeepSeek’s model as an “excellent AI advancement.”
Nvidia CEO Jensen Huang Loses Billions
The market loss had a direct impact on Nvidia CEO Jensen Huang, whose net worth dropped by $21 billion in a single day. Huang, who owns 3% of the company, saw his wealth shrink from $124.4 billion to $103.1 billion.
Huang has long been a central figure in Nvidia’s rise as a leader in AI technology. However, the rise of competition like DeepSeek could challenge Nvidia’s position as the go-to provider for AI infrastructure, potentially eroding its profits and market dominance.
Surprising Market Stats
The sheer scale of Nvidia’s $589 billion market cap loss is difficult to comprehend. To put this into perspective, the drop is larger than the market value of household-name companies like:
- UnitedHealth
- Exxon Mobil
- Costco
It’s also more than double the size of Nvidia’s previous worst single-day loss in September 2024, when the company shed $279 billion.
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